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HMRC internal manual

Capital Gains Manual

Incidental costs of acquisition and disposal: specific examples

Cost of transfer/conveyance

The transfer of title to a chattel is, in law, accomplished by delivery of the chattel. `Cost of transfer or conveyance’ would therefore include the seller’s costs of transporting a chattel to the point of sale, for example the costs of packing, carriage and insurance in transit to an auctioneer’s premises. But no deduction is allowable in respect of any expenditure by the purchaser in transporting the chattel from the point of acquisition.

Valuation costs

The costs reasonably incurred in making any valuation or apportionment necessary for making a capital gains computation are allowable deductions. This applies whether the costs are incurred for the purposes of rendering a return or for the purposes of a post transaction valuation check (see CG16615).

However, any expenses incurred after a valuation or apportionment has been made are not allowable as they are not incurred for the purpose of computing the gain. (Caton’s Administrators v Couch 70 TC 10). Disallowable expenses include the cost of resolving any disagreement on value between the taxpayer and the Revenue. This is so whether the disagreement is resolved by negotiation or by litigation. In the latter instance, all costs of appeals (and contributions to such costs) will be disallowed.

Notional expenditure

In certain circumstances assets are deemed to have been sold and reacquired at their market value, for example, on the application of the rebasing rules to assets held on 31 March 1982. No deduction may be given for notional incidental expenditure, such as would have been incurred in an actual transaction, for example, transfer fees.

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Share exchange

For expenses incurred on the acquisition of shares as a result of a share exchange, see CG52591.

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Liquidator’s expenditure

You may allow a deduction for any part of a liquidator’s expenditure wholly and exclusively incurred in disposing of a company’s assets. A liquidator is normally a professional person, for example an accountant, and in their capacity as liquidator they may pay themselves fees for professional services. To the extent that it can be shown that such fees (or part of them) have been wholly and exclusively incurred in disposing of a company’s assets, they may be included in the part of the liquidator’s expenditure ranking as an allowable deduction. Where the actual expenditure on specific assets cannot be identified, a reasonable apportionment may be made.